Base One Technologies, Inc. v. Ali, 78 F. Supp. 3d 186

Background

Base One Technologies (staffing firm) placed Ali and Beyzavi as employees on an ongoing, funded IBM project; both signed Confidentiality and Non-Compete Agreements restricting marketing to assigned Base One clients and solicitation of Base One employees/contractors, governed by New York law.
Section 3(A) barred employees from “market[ing] any Competitive type services” to clients assigned to them during employment and for one year post-employment; Section 3(B) barred soliciting/contacting Base One’s employees/independent contractors.
While still employed by Base One (June 2014), Ali and Beyzavi allegedly approached IBM and were hired directly by IBM, depriving Base One of placement revenue through June 2015.
Base One sued asserting breach of Sections 3(A) and 3(B), breach of fiduciary duty, unjust enrichment, faithless-servant, and other claims; defendants moved to dismiss under Rule 12(b)(6).
Court applied New York substantive law (parties relied on it); held some claims plausible at pleading stage and dismissed others.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Breach of §3(A) (marketing to client)	Ali/Beyzavi offered/marketed their services to IBM while employed, violating §3(A)	“Market” requires advertising/promoting a competing business; mere offering/acceptance of IBM job is not marketing	Denied dismissal: dictionary definition and allegations that defendants approached IBM suffice to state breach; §3(A) not unenforceable at this stage
Breach of §3(B) (solicitation of employees/contractors)	Defendants coordinated/solicited each other to leave and join IBM	One-on-one contact between coemployees is not solicitation; clause should require representation of a competing business or benefit	Granted dismissal: clause is vague/ambiguous as drafted and unenforceable
Breach of fiduciary duty	As employees, defendants owed fiduciary duty and breached it by soliciting IBM	They were low-level IT employees; fiduciary duty requires a higher level/closer relationship	Denied dismissal: under NY law employees (even low-level) can owe fiduciary duties to employer
Unjust enrichment	Defendants received benefit (employment with IBM) at Base One’s expense by misappropriating client relationship; alternative to contract claim	Existence of contract precludes quasi-contract; facts insufficient to show unjust enrichment	Denied dismissal: pleading in the alternative is allowed and facts plausibly show benefit at plaintiff’s expense
Faithless-servant doctrine	Defendants acted disloyally during employment by soliciting IBM and exploiting access, forfeiting right to compensation during disloyalty	Faithless-servant requires misuse of employer’s time/facilities/proprietary secrets, which plaintiff did not allege	Denied dismissal: court rejects rigid requirement; doctrine applies where employee obtains improper advantage at employer’s expense
Injunctive relief (Count VIII)	Requests injunctive relief to enforce covenants/stop ongoing harm	Injunctive relief is not a standalone cause of action	Granted dismissal of Count VIII as a separate claim; injunctive relief remains available as remedy if other claims succeed

Key Cases Cited

Ashcroft v. Iqbal, 556 U.S. 662 (legal-pleading standard for factual sufficiency)
Bell Atl. Corp. v. Twombly, 550 U.S. 544 (plausibility standard for complaints)
Erie R.R. Co. v. Tompkins, 304 U.S. 64 (federal courts apply state substantive law in diversity cases)
BDO Seidman v. Hirshberg, 93 N.Y.2d 382 (New York reasonableness test for restrictive covenants)
Phansalkar v. Anderson Weinroth & Co., 344 F.3d 184 (employee fiduciary duty/loyalty under NY law)
Pure Power Boot Camp, Inc. v. Warrior Fitness Boot Camp, LLC, 813 F. Supp. 2d 489 (unenforceability for imprecise restrictive covenants; faithless-servant discussion)
Fada Int’l Corp. v. Cheung, 57 A.D.3d 406 (discussing limits of loyalty claims where employer resources not used)